SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report: July 30, 1996
Date of earliest event reported: July 17, 1996
PRESIDENT CASINOS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20840 51-0341200
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
802 North First Street, St. Louis, Missouri 63102
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(Address of principal executive offices) (Zip code)
(314) 622-3000
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On July 22, 1996, President Casinos, Inc. (the "Company") announced that
President Riverboat Casino-Mississippi, Inc. ("PRCM"), a wholly owned
subsidiary of the Company, has entered into a Letter of Intent, dated July 17,
1996 (the "PRCM Letter of Intent"), with Primadonna Resorts, Inc.
("Primadonna") to sell PRCM's leasehold rights to the property leased by PRCM
at the Broadwater Marina in Biloxi, Mississippi for $15 million in cash. PRCM
currently leases the Broadwater Marina for use in connection with its gaming
operations under a long-term lease from BH Acquisition Corporation, a company
wholly owned by John E. Connelly, the chairman and principal stockholder of
the Company. Pursuant to the PRCM Letter of Intent, PRCM will lease the
property back from Primadonna under a triple net operating lease with no
additional monthly rental obligations until the expiration of one year and,
subject to certain conditions, will receive an option to extend the lease,
subject to a 90-day cancellation notice from Primadonna, for up to an
additional two-year period at a rental equal to 2% of net gaming revenues
during the term.
In addition, the Company also announced that in a separate transaction BH
Acquisition Corporation has entered into a Letter of Intent, dated July 17,
1996 (the "BH Letter of Intent"), with Primadonna for the sale of the
Broadwater Marina and certain other properties owned by BH Acquisition
Corporation in Biloxi, Mississippi.
The foregoing description is qualified in its entirety by the complete text
of the PRCM Letter of Intent and the BH Letter of Intent included as Exhibits
2.1 and 2.2, respectively, to this Current Report on Form 8-K.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. Not applicable.
(b) Pro forma financial information. Not applicable.
(c) Exhibits. See Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 30, 1996
PRESIDENT CASINOS, INC.
By /s/ John S. Aylsworth
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John S. Aylsworth, Executive Vice President
and Chief Operating Officer
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EXHIBIT INDEX
Exhibit
Number
Description
2.1 Letter of Intent Agreement, dated as of July 17, 1996, by and between
President Riverboat Casino-Mississippi, Inc. and Primadonna Resorts,
Inc.
2.2 Letter of Intent Agreement, dated as of July 17, 1996, by and between
BH Acquisition Corporation and Primadonna Resorts, Inc.
99 Press Release, dated July 22, 1996.
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EXHIBIT 2.1
Primadonna Resorts, Inc.
Interstate 15
Nevada/California Border
Stateline, Nevada 89019
July 17, 1996
Mr. John Aylsworth, President
President Riverboat Casino - Mississippi, Inc.
c/o President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Re: Acquisition of Leasehold and Leaseback of Broadwater Beach Hotel
and Resort Marina
Dear Mr. Aylsworth:
This Letter of Intent is intended to outline certain of the principal terms
and conditions with respect to a proposed transaction whereby Primadonna
Resorts, Inc., a Nevada corporation, or its designee ("Purchaser") may
purchase the interest of the lessee under that certain Restated Lease
Agreement between BH Acquisition, Inc. (a/k/a BH Acquisition Corporation) and
President Riverboat Casino - Mississippi, Inc. ("Seller"), a wholly owned
subsidiary of President Casinos, Inc. ("Seller's Parent") (the Purchaser and
Seller are sometimes hereinafter called the "Parties"), dated effective July
15, 1992 (the "Restated Lease"), together with certain other associated rights
described below (such interest and other rights are sometimes collectively
referred to as the "Leasehold"); and the leaseback of the Leasehold by
Purchaser to Seller (such sale and leaseback are sometimes collectively
referred to as the "Transaction"); the terms of which are as follows:
1. Purchase of Leasehold. On the closing of the Transaction (the "Closing"),
Purchaser will purchase substantially all of the transferable right, title,
and interest of Seller in and to the Leasehold which comprises or is utilized
in the operation of the President Casino Riverboat business of Seller located
in Harrison County, Mississippi (the "Riverboat Casino"), which consists of
the "Demised Premises" defined in the Restated Lease (namely, the Dock Area,
Tidelands, Fastlands, Office Buildings and Hotel Units respectively defined in
the Restated Lease), free and clear of all liens and encumbrances other than
those expressly assumed by the Purchaser at Closing, together with the
following assets and interests relating to the Seller's interest created in
the Restated Lease:
a. all Army Corps of Engineers permits (if any);
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b. all State of Mississippi and any subdivision thereof approvals and permits
(if any) other than gaming licenses and licenses relating to the service of
food and beverages;
c. U.S. Coast Guard permits and approvals (if any);
d. other federal, state, and local approvals and permits related to the
Leasehold issued to or held by the Seller (if any) and not consisting of
gaming licenses or licenses for the service of food and beverages;
e. all signage and other leasehold improvements relating to the Leasehold, to
the extent the same are the property of the Seller under the Restated Lease;
f. Seller's assignable right, title and interest in and to leases of
billboards to which Seller is a party and which relate to the Seller's
operations in Harrison County, Mississippi (collectively, the "Billboard
Leases");
g. a copy of Seller's customer list relating to Seller's operations in
Harrison County, Mississippi (the parties intending that Purchaser shall be
entitled to use the information contained therein for its own account on a
nonexclusive basis with Seller and any successor to or assignee or licensee of
Seller); and
h. all other related certifications, licenses, permits, authorizations,
approvals, maintenance records, utility records, environmental reports,
engineering reports, project development plans, architectural plans and
renderings, construction contracts and other documents pertaining to the
Leasehold (as distinct from those relating to the Goldcoast barge, which are
excluded from the sale).
The Transaction shall not include a sale or purchase of the Seller's
interest in the Goldcoast barge, any machinery, equipment and fixtures
thereon, the gaming equipment and supplies and other Riverboat Casino assets
of Seller, or any other assets of the Seller not listed above. In lieu of the
Purchaser acquiring certain of the items listed in a. through h. above at the
Closing and leasing them back to Seller pursuant to the New Lease (as defined
below), for the convenience of the parties the Definitive Agreement (defined
below) may provide for Seller to retain such items and convey them to
Purchaser upon the expiration or termination of the New Lease, and shall
further provide security to Purchaser in order to enable Purchaser to obtain
such items. The signage and other leasehold improvements included in the sale
will be conveyed by Seller "as is where is" in their then existing condition
on the date of Closing, free and clear of all liens, claims and encumbrances
not arising pursuant to the Restated Lease, provided Seller shall maintain
such signage and improvements through the date of Closing consistent with past
practice.
2. (a) Purchase Price. The purchase price for the Leasehold shall be
$15,000,000.00, payable in cash at the Closing deliverable in the form of a
cashier's check, or by wire transfer of immediately available funds to Seller.
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In addition to the cash portion of the purchase price, the Purchaser shall
assume, pay and discharge when due all obligations of the Seller to the lessor
and any other third party under the Restated Lease and the Billboard Leases,
to the extent such obligations occur after the date of Closing, and shall
indemnify, defend and hold harmless Seller from any and all claims and
liabilities regarding obligations requiring performance under the Leasehold on
and after the date of Closing. Seller shall indemnify, defend and hold
harmless Purchaser from any and all claims and liabilities regarding the
Seller's obligations requiring performance under the Restated Lease or the
Leasehold prior to the date of Closing and/or arising from Seller's Riverboat
Casino operations. To the extent appropriate, the parties shall prorate
expense and revenue items relating to the Leasehold as of the date of Closing
such that the benefits and burdens of such expenses and revenues are borne by
the party owning the Leasehold from time to time. Purchaser shall remit to
Seller at Closing applicable sales or other transfer taxes, if any,
attributable to the sale of the Leasehold, provided that Seller shall
cooperate with Purchaser to take advantage of any available exemption.
(b) Leaseback. On the date of Closing, Purchaser will lease back to
Seller, for a period of one year following the date of Closing, its entire
interest in the Leasehold acquired from Seller in order to allow Seller to
continue operating the Riverboat Casino on substantially the same terms and
conditions as the Restated Lease, but without any monetary rental obligation
payable to Purchaser during the term of such lease (the "New Lease"). The
form of the New Lease shall be attached as an exhibit to the Definitive
Agreement, and shall contain, among other things, indemnity obligations of the
Seller (as tenant) in favor of Purchaser (as landlord) on terms customarily
found in arms length commercial leasing transactions. At the expiration of
the term of the New Lease (including any extensions by Seller in accordance
with this paragraph), Seller shall vacate and surrender the Demised Premises
and property covered by the New Lease immediately without further demand,
action, or notice. Purchaser and Seller shall obtain, at their respective
cost and expense, all licenses, approvals and permits necessary to for each of
them to perform under the terms hereof. Further, Seller may, at its option,
extend the New Lease for up to an additional two (2) years at a monetary
rental equal to 2% of Seller's net gaming revenues during such extended term
(as reflected on Seller's periodic gaming revenue reports filed with the
Mississippi Gaming Commission), subject to Purchaser's right to terminate the
New Lease after providing Seller with a ninety (90) day notice to vacate and
surrender the Demised Premises and other property covered by the New Lease.
Upon such termination and passage of such ninety (90) day period, Seller have
no further right, interest, or title to the Demised Premises and other
property covered by the New Lease.
3. Earnest Money and Date of Closing. Upon the execution of this Letter of
Intent, Purchaser shall wire transfer to an escrow agent to be mutually agreed
upon by the Purchaser and Seller immediately available funds in the amount of
$500,000.00 as an earnest money deposit (the "Earnest Money Deposit") to be
invested in an interest bearing account or other interest-bearing obligations
mutually acceptable to the Parties. The Earnest Money Deposit, together with
accrued interest, shall be refundable to Purchaser in the event that (i) no
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"Definitive Agreement" (as hereinafter defined) is executed and delivered by
the Parties on or before 5:00 p.m. EST on August 10, 1996, or (ii) Purchaser
Seller, in writing and prior to the expiration of the "Due Diligence Period"
(as hereinafter defined), of the Purchaser's election not to proceed with the
acquisition of the Leasehold. Upon the expiration of the Due Diligence
Period, Purchaser shall increase the principal amount of the Earnest Money
Deposit by wire transfer to the escrow agent of an additional deposit of
$500,000.00 in immediately available funds to be invested in an interest-
bearing account or other interest bearing obligations mutually acceptable to
the Parties. After the expiration of the Due Diligence Period, the Earnest
Money Deposit shall become nonrefundable to Purchaser, absent (a) a material
breach of the Definitive Agreement by Seller, (b) the Purchaser's failure to
obtain a finding of suitability of the Purchaser (as the lessor to Seller
under the New Lease) on or before December 1, 1996, or (c) the inability of BH
Acquisition Corporation to deliver to Purchaser good and marketable title
(free and clear of liens and encumbrances to the extent contemplated therein)
to all material assets referenced in the letter of intent, dated as of July
17, 1996, between Purchaser and BH Acquisition Corporation, contemplating the
Purchaser's or its affiliates' acquisition of the real property and
improvements comprising the Broadwater Beach Hotel and Resort, the Broadwater
Tower, the Broadwater Beach Hotel and Resort Marina and the Sun Golf Course
from BH Acquisition, Inc. to occur simultaneously with the Closing hereunder
(the "Broadwater Acquisition"); provided in each case Purchaser is not in
material breach of the Definitive Agreement. Subject to the terms of
paragraph 4 which permit Purchaser until December 1, 1996 to obtain a finding
of suitability, the date of the Closing of the Transaction shall be October 1,
1996. At the Closing, the Earnest Money Deposit, plus accrued interest, shall
be applied against the Purchase Price. In the event the Closing does not
occur for any reason other than (x) a material breach of the Definitive
Agreement by Seller, (y) the Purchaser's failure to obtain a finding of
suitability of the Purchaser on or before December 1, 1996, or (z) the
inability of BH Acquisition Corporation to deliver to Purchaser good and
marketable title to all material assets covered by the Broadwater Acquisition,
then Seller may, at Seller's option, elect to retain the Earnest Money Deposit
plus all accrued interest and all monies paid on account of the purchase price
as liquidated damages, in which event the Definitive Agreement shall become
null and void and both Parties shall thereupon be released of all further
liability thereunder (it is hereby agreed that, without resale, Seller's
damages will be difficult of ascertainment and that the Earnest Money Deposit
plus all accrued interest and all monies paid on account of the purchase price
constitute a reasonable liquidation thereof and not a penalty). The parties
shall negotiate the terms, conditions and circumstances under which a break-up
fee in an amount equal to the Earnest Money Deposit (disregarding interest
thereon) may be paid to Purchaser in the event that Seller sells the Leasehold
to an entity or person other than Purchaser. The terms and conditions of the
break-up fee shall be set forth in the Definitive Agreement, it being
understood that no break-up fee shall be payable by Seller under circumstances
where Purchaser is entitled to receive a break-up fee (or similar payment)
from BH Acquisition Corporation as a result of the failure to close the
Broadwater Acquisition.
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4. Definitive Agreement. Upon the execution of this Letter of Intent, the
Parties shall negotiate in good faith until the "Termination Date" (as
hereinafter defined) to attempt to agree upon, execute and deliver a mutually
acceptable purchase and sale agreement for the Leasehold (the "Definitive
Agreement"). The Definitive Agreement shall contain the terms and conditions
set forth herein in the Binding Provisions and such other terms and conditions
as are agreed upon by the Parties.
The Definitive Agreement (if agreed upon and executed by the Parties) shall
contain, as a condition to Purchaser's obligation to close the Transaction, a
requirement that a finding of suitability of the Purchaser (as the lessor to
Seller under the New Lease) be made by the Mississippi Gaming Commission.
Purchaser shall file an application for a finding of suitability with the
Mississippi Gaming Commission within seven (7) days following the execution
and delivery of this Letter of Intent, and Purchaser thereafter shall use its
best efforts to advance and process such application. Purchaser shall fully
and promptly comply with all requests of the Mississippi Gaming Commission
regarding the processing of such application and with the requirements for the
granting of a finding of suitability to Purchaser. The Purchaser shall
concurrently provide Seller with a copy of all documents filed by Purchaser
with the Mississippi Gaming Commission regarding the finding of suitability
(excluding any non-public personal disclosures), and Purchaser shall promptly
provide Seller with a copy of all requests for information and other
correspondence concerning the Purchaser's suitability application received by
Purchaser from the Mississippi gaming Commission (provided that Purchaser may
black out any personal, non-public information set forth in any correspondence
received from the Mississippi Gaming Commission prior to sending a copy of the
same to Seller). Prior to the Closing of the Transaction or the termination
of the Definitive Agreement by Seller as hereinafter set forth, Purchaser
shall provide Seller with a bi-weekly written status report regarding the
Purchaser's application for a finding of suitability. In the event that: (i)
Purchaser has been advised in writing by the Mississippi Gaming Commission
that Purchaser will be unable to obtain the finding of suitability; and (ii)
Purchaser's inability to obtain such finding of suitability is for reasons
which are beyond Purchaser's control and which cannot be cured by Purchaser,
then upon the occurrence of the events in clauses (i) and (ii), Purchaser may
elect to terminate the Definitive Agreement by delivering written notice of
such termination to Seller on or before December 1, 1996 and, upon such
termination, the Earnest Money Deposit, together with accrued interest, will
be returned to Purchaser. Time shall be of the essence with respect to such
termination notice, and such notice, if sent, shall set forth the reason such
finding of suitability is unobtainable, and shall include a copy of any
writing from the Mississippi Gaming Commission stating that the finding of
suitability has been denied to Purchaser. In the event that the Mississippi
Gaming Commission does not issue a finding of suitability to Purchaser on or
before December 1, 1996, then Seller may at any time thereafter (until such
time, if any, when a finding of suitability of the Purchaser is formally made
by the Mississippi Gaming Commission), in Seller's sole discretion, terminate
the Definitive Agreement without liability to Purchaser and receive the
Earnest Money Deposit, together with accrued interest.
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The Definitive Agreement (if agreed upon and executed by the Parties) shall
contain, as a condition to Seller's obligation to close the Transaction, a
requirement that Seller have received, from an appraiser reasonably
satisfactory to Seller, an appraisal reflecting that the aggregate fair value
of the assets being sold by BH Acquisition Corporation as part of the
Broadwater Acquisition is not less than $41,500,000. In no event shall
Purchaser be responsible for the costs associated with such appraisal.
The Definitive Agreement shall supersede the terms and conditions of this
Letter of Intent. In the event that the Parties have not agreed upon,
executed and delivered the Definitive Agreement on or before 5:00 p.m. EST on
August 10, 1996 (the "Termination Date"), then the obligation to continue
negotiations in good faith and the "Binding Obligations" (as hereinafter
defined) shall automatically expire and be of no further force and effect, and
thereafter neither Purchaser nor Seller shall have any further obligation or
liability to the other, and the Earnest Money Deposit plus all accrued
interest shall be returned to Purchaser.
5. Due Diligence. For the time period commencing on the date of the Parties'
execution of this Letter of Intent and continuing until 5:00 p.m. EST on the
date which is sixty (60) days following the date of the Parties' execution of
this Letter of Intent (the "Due Diligence Period"), the Purchaser and its
representatives shall have the right to enter upon and conduct an
investigation of the Leasehold, including, without limitation, the agreements
that have created the Leasehold, any correspondence with the lessor, the State
of Mississippi or any other person relevant to the Leasehold, and such other
matters and documents requested by Purchaser as are reasonably necessary to
evaluate the Transaction contemplated by this Letter of Intent. Purchaser and
its representatives will coordinate all due diligence investigations with
Seller, and Seller shall have the right to have a representative present
during any on-site investigation of Seller's files, books and records.
Purchaser shall conduct its due diligence investigation in a manner which will
not disrupt the Seller's business operations, and Seller shall respond with
reasonable promptness to Purchaser's requests for information during the Due
Diligence Period. Purchaser shall not conduct any drilling or invasive
testing at the property covered by the Leasehold without obtaining the prior
written consent of Seller, which consent shall not be unreasonably withheld or
delayed. Purchaser shall promptly provide Seller with a copy of all tests
results, reports, and other materials obtained by Purchaser in connection with
its due diligence investigation. If, for any reason, Purchaser is not
satisfied, in Purchaser's sole discretion, with the results of its due
diligence investigation, Purchaser may terminate the Definitive Agreement by
written notice delivered to Seller no later than the expiration of the Due
Diligence Period, time being of the essence. If the Definitive Agreement is
not executed and delivered by the Parties before the Termination Date, then
the Due Diligence Period shall automatically terminate on the Termination Date
and the Earnest Money Deposit shall be returned to Purchaser. Purchaser shall
promptly repair and restore any damage caused to any property of Seller and
shall indemnify, defend and hold harmless Seller from and against any and all
claims, demands, liabilities and damages arising or resulting from the due
diligence investigation conducted by Purchaser and its representatives.
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Purchaser shall not be liable to Seller for any claims, demands, liabilities
and damages occurring solely as a result of facts or pre-existing conditions
at the property covered by the Leasehold and which are discovered by Purchaser
during the course of its due diligence investigation. The obligations set
forth in the preceding sentence shall survive the termination of this Letter
of Intent. Purchaser and its agents and contractors shall provide Seller with
evidence of insurance coverage (to be reasonable in scope and amount) with
respect to on-site investigations to be performed during the Due Diligence
Period, and all such insurance coverage shall name Seller as an additional
insured.
6. Exclusivity. For the period commencing on the date of the Parties'
execution of this Letter of Intent and expiring on the Termination Date, the
Seller and its representatives shall not, directly or indirectly, solicit or
discuss any offers of third parties to acquire the Seller's interest in the
Leasehold, nor shall Seller or its representatives negotiate with any other
party regarding the disposition of the Seller's interest in the Leasehold,
except in each case to the extent the board of directors of Seller's Parent,
after conferring with counsel and acting in good faith, determines that it
owes a fiduciary duty to the shareholders of President Casinos, Inc. that
requires it to pursue any such discussions or negotiations. The Seller shall
promptly notify the Purchaser in writing of any such discussions or
negotiations, and shall keep the Purchaser reasonably informed of the status
thereof from time to time. Following the Parties' execution of this Letter of
Intent, Seller shall continue to perform its obligations and carry on its
activities under the Leasehold in the ordinary course of business and in a
manner consistent with the Seller's past practice.
7. Confidentiality. Purchaser will treat as confidential and shall not
disclose or use, and will direct its representatives not to disclose or use,
to the detriment of Seller any information with respect to the Leasehold which
was obtained by Purchaser as a result of its due diligence investigation or
furnished by the Seller or its representatives to the Purchaser or its
representatives at any time or in any manner other than in connection with its
evaluation of the Transaction proposed in this Letter of Intent. Upon
termination of the Due Diligence Period, the Purchaser shall either (i) return
to Seller all of the information which Purchaser received from Seller during
the Due Diligence Period, or (ii) immediately destroy all of such information
and certify, in writing by an executive officer of Purchaser, to Seller that
such destruction has occurred; provided, however, that Purchaser shall provide
Seller with ten (10) days prior written notice before the destruction of any
documents, reports or other information, and during such ten (10) day period
the Seller shall have the right to require that Purchaser immediately return
any or all of such information to Seller rather than destroying the same. The
confidentiality and non-disclosure obligations shall not apply if, and to the
extent, the Purchaser can demonstrate that (a) the information was known to
Purchaser (as established by written documents existing before disclosure of
such information by Seller) prior to the earlier of its due diligence
investigation or its receipt of such information from the Seller; (b) the
information is or becomes part of the public domain other than by Purchaser's
(or its representatives') direct or indirect act; (c) the information is
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rightfully disclosed to Purchaser by a third party without confidential or
proprietary restrictions; or (d) similar information is independently
developed by Purchaser without access to the Seller's information. In the
event that Purchaser or its representatives are at any time requested or
required by any court or any other duly authorized governmental entity (by
oral questions, interrogatories, requests for information or documents,
subpoena or similar process) to disclose any of the information obtained from
their due diligence investigation or received from Seller, Purchaser agrees to
provide the Seller with prompt notice of such request(s) so that the Seller
may seek an appropriate protective order and/or waive compliance with the
provisions of this Letter of Intent.
Upon the execution and delivery of this Letter of Intent by both of the
Parties, each of the Parties shall simultaneously issue its press release
regarding the Transaction. Thereafter, neither the Purchaser nor the Seller
will, and each will direct its representatives not to make, directly or
indirectly, any public comment, statement or other communication with respect
to, or otherwise to disclose or to permit the disclosure of the existence of
discussions regarding the possible transaction between the Parties or any of
the terms, conditions, or other aspects of the Transaction proposed in this
Letter of intent or the Definitive Agreement; provided, however, that the
Parties may discuss with and provide information regarding the Transaction (x)
to the media and to stock analysts, investment bankers and other financial
analysts so long as such discussions and information provided by the Parties
are within the scope of the Parties' press releases (and such information does
not address issues or provide information which was not addressed or provided
in such press releases), and (y) to the Parties' respective banks,
accountants, advisers and other representatives (including providing such
persons and entities with a copy of this Letter of Intent and the Definitive
Agreement -- and concurrently informing all such persons and entities to whom
copies are provided of the confidential nature of such information and the
obligations of the Parties under the terms of this Letter of Intent).
Further, Purchaser shall have the right to contact and provide information
regarding the transaction to the Mississippi Gaming Commission. If a Party is
required by law to make any such disclosure, it must first provide to the
other Party for review (and if required, approval, which shall not be
unreasonably withheld or delayed) the content of the proposed disclosure, the
reasons that such disclosure is required by law, and the time and place that
the disclosure will be made. The obligations set forth in this Paragraph 7
shall survive the termination of this Letter of Intent. Nothing in this
Paragraph 7 is intended or shall be construed (a) to prevent Seller from
complying with its disclosure obligations under the Securities Exchange Act of
1934, including the filing of a copy of this Letter of Intent and the letter
of intent for the Broadwater Acquisition as attachments to a filing on Form 8-
K, or (b) thereafter to prevent either Party from releasing a copy of this
Letter of Intent to any person.
8. Entire Agreement. It is expressly agreed and understood that the only
binding and enforceable terms of this Letter of Intent are the following
provisions (the "Binding Provisions"): (i) the initial Earnest Money Deposit
of $500,000.00 and the terms of the return thereof as described in Paragraph 3
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hereof; (ii) this Paragraph 8; and (iii) the terms of Paragraphs 4, 5, 6, 7,
9, 10 and 11 hereof. The Binding Provisions constitute the entire agreement
between the Parties, and supersede all prior oral or written agreements
regarding the subject matter hereof. The Binding Provisions may be amended or
modified only by a writing executed by each of the Parties. The Binding
Provisions do not obligate either of the Parties to purchase or sell the
Leasehold, and such obligation to purchase and sell the Leasehold shall be
contained and enforceable only as specifically set forth in the Definitive
Agreement. The terms of Paragraphs 7, 10 and 11 hereof, this Paragraph 8, and
the terms of the Purchaser's repair, restoration and indemnification
obligations as set forth in the eighth sentence of Paragraph 5 hereof, shall
survive the termination of this Letter of Intent.
9. Governing Law. This Letter of Intent and the Binding Provisions will be
governed by and construed under the laws of the State of Mississippi without
regard to conflicts of law principles. Any action or proceeding seeking to
enforce any provision of, or based upon any right arising out of, this Letter
of Intent shall be brought by and against the Parties in the United States
District Court for the District of Mississippi (or, in the event that the
dollar amount or other jurisdictional requirements for federal court
jurisdiction are not met, then such action shall be brought in the Mississippi
state court located in Harrison County, Mississippi), and each of the Parties
hereby consents to the jurisdiction of such courts in any such action or
proceeding and waives any objection to venue laid therein.
10. No Liability. Other than the Binding Provisions contained in this Letter
of Intent, the paragraphs and provisions of this Letter of Intent do not
constitute and do not give rise to any legally binding obligation on the part
of either of the Parties. Moreover, except as expressly provided in the
Binding Provisions (or as may be expressly provided in the Definitive
Agreement), no past or future action, course of conduct or failure to act
relating to the Transaction or relating to the negotiation of the terms of the
Transaction or the Definitive Agreement, will give rise to or serve as a basis
for any obligation or other liability on the part of the Parties.
11. Cost and Expenses. The Purchaser and Seller will be responsible for and
shall bear all of their own respective costs and expenses (including any
broker or finder's fees and the expenses of its representatives) incurred at
any time in connection with pursuing or consummating the Transaction.
Purchaser shall specifically pay, indemnify, defend and hold harmless Seller
against any fees due Oppenheimer & Company and any other broker retained by
Purchaser, but not any broker retained by Seller.
12. Assignment. Both this Letter of Intent and the Definitive Agreement will
be assignable by Purchaser only to a wholly owned subsidiary of Purchaser upon
prior written notice to Seller; provided, however, that in the case of such
assignment, Purchaser will remain liable for all obligations of the Purchaser
hereunder and under the terms of the Definitive Agreement.
The Parties expressly acknowledge and agree that, with the exception of the
Binding Provisions, this Letter of Intent does not constitute a binding
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agreement on the Parties, and neither party shall be obligated to purchase and
sell the Leasehold until both Parties execute and deliver a mutually
acceptable Definitive Agreement. Facsimile signatures of representatives of
the Parties to this Letter of Intent shall be treated as original signatures
for all purposes.
Please indicate that the terms and provisions set forth above are
acceptable, and we will thereafter proceed to negotiate the Definitive
Agreement.
Very truly yours,
PRIMADONNA RESORTS, INC.
By:/s/ Gary E. Primm
Gary E. Primm, Chief Executive
Officer
Accepted by Seller this 17th day of July, 1996.
Seller:
PRESIDENT RIVERBOAT CASINO -
MISSISSIPPI, INC.
By:/s/ John S. Aylsworth
----------------------------
John Aylsworth, President
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EXHIBIT 2.2
Primadonna Resorts, Inc.
Interstate 15
Nevada/California Border
Stateline, Nevada 89019
July 17, 1998
Mr. John E. Connelly, President
BH Acquisition Corporation
c/o J. Edward Connelly Associates, Inc.
2180 Noblestown Road
Pittsburgh, PA 15205
Re: Acquisition of Certain Assets of BH Acquisition Corporation
Dear Mr. Connelly:
This Letter of Intent is intended to outline certain of the principal terms
and conditions with respect to a proposed transaction whereby Primadonna
Resorts, Inc., a Nevada Corporation, or its designee ("Purchaser") may
purchase certain of the assets of BH Acquisition Corporation, a Mississippi
Corporation ("Seller") (the Purchaser and Seller are sometimes hereinafter
called the "Parties") as hereinafter described (the "Transaction"), which
terms and conditions are as follows:
1. Assets to be Purchased. All of Seller's right, title and Interest in, and
to the real property and related appurtenances and all buildings, structures
and improvements comprising the Broadwater Beach Hotel and Resort, the
Broadwater Tower, the Broadwater Beach Hotel and Resort Marina and the Sun
Golf Course (hereinafter collectively called the "Properties") and all owned
and leased property used in the operation thereof, including all inventories
of linen, china, glassware, silverware and other operating equipment,
contracts, equipment leases and other leases, billboards, work in process,
permits and licenses to the extent transferable, trademarks, tradenames,
service marks, logos and other intellectual property, computer equipment,
software, furniture, fixtures, sales and customer records (including guest
history) and other information and documentation pertaining to the ownership
and operation of the Properties (the Properties and the other assets of Seller
as described above are hereinafter collectively called the "Purchased
Assets"). The Purchased Assets shall include all of Sellers rights title and
interest in and to any Army Corps. of Engineers and U.S. Coast Guard permits
and approvals and other federal, state and local approvals and permits, to the
extent transferable, relating to the Properties: the Public Tideland Lease
dated August 6, 1992 between Seller and the State of Mississippi; the Fastland
leases for land adjacent to the Properties; the Seller's interest (as lessor)
in that certain Restated Lease Agreement between Seller and President
Riverboat Casino-Mississippi, Inc. effective July 15, 1992 (the "Marina
Lease"); and the Beauvoir leasehold for property located on the Sun Golf
Course and any and all amendments thereto,
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The Purchased Assets shall not include (i) the real property and related
appurtenances and all improvements comprising the Broadwater Inn and the
Seller's assets used in connection with the ownership and operation of the
Broadwater Inn; (ii) the real property and related appurtenances and all
improvements comprising the Sea Golf Course and the Seller's assets used in
connection with the ownership and operation of the Sea Golf Course; (iii) all
cash on hand or in bank or other accounts, and all accounts receivable of
Seller, (iv) any tax credits or attributes, including any tax refunds due and
payable to Seller, (v) any insurance prepayments or refunds; (vi) the
corporate minute book, stock records or other records pertaining to the
corporate existence of Seller, or (vii) the equipment for which Seller has
retained the obligation to pay and perform, after the closing, under the terms
of the leases or other agreements pertaining to such equipment (i.e. the
telephone equipment, computer equipment, photo copiers, kitchen equipment and
the like). The assets described in subparagraphs (i) through (vii) above are
hereinafter called the "Excluded Assets."
The Purchased Assets will be conveyed by Seller "as is, where is" in their
then existing condition on the date of closing, free and clear of all liens,
claims and encumbrances except for the "Assumed Contracts" (as hereinafter
defined) and the title exceptions set forth in Seller's existing title
policies other than title exceptions for any existing mortgages, UCC security
interests, and judgments. During the Due Diligence Period, Seller shall
provide Purchaser with a copy of the Seller's existing title policies for the
Properties.
2. Purchase Price. The purchase price for the Purchased Assets shall be
$41,600,000.00, payable in cash at the closing by cashier's check or by wire
transfer of immediately available funds to Seller.
In addition to the cash portion of the purchase price as described above,
the Purchaser shall assume, pay and discharge when due the Seller's
obligations occurring after the closing with respect to the following: (i) all
liability of the Seller to perform under contracts entered into or received in
the ordinary course of business of the Sun Golf Course property, which
contracts are not completed by Seller prior to the closing and which are not
in default at the time of closing; (ii) all liability of the Seller under
contracts and orders for the purchase of services, materials and supplies
regarding the Sun Golf Course property and entered into by Seller in the
ordinary course of business (to the extent that such contracts and agreements
are not cancelable by their terms by the Seller prior to the closing date);
(iii) all liability of the Seller arising from and under any leases of real
property; and (iv) all liability of Seller arising from any leases of tangible
personal property regarding the Sun Golf Course property. The contractual
obligations described in subparagraphs (i) through (iv) above are hereinafter
called the "Assumed Contracts." Seller shall indemnify, defend and hold
harmless Purchaser from any and all claims and liabilities regarding the
Seller's obligations requiring performance under the Assumed Contracts prior
to the date of closing. Purchaser shall indemnify, defend and hold harmless
Seller from any and all claims and liabilities regarding obligations requiring
performance under the Assumed Contracts on and after the date of closing.
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Seller shall have the option to lease from Purchaser the Broadwater Tower
property and all improvements and personal property previously utilized by
Seller in the operation of the Broadwater Tower, such lease to be for a period
of six (6) months following the closing of the Transaction and will be
continued on a month to month basis after the six-month period until either
Seller or Purchaser cancels the lease by giving thirty days written notice to
the other party. The Seller's leasing of the Broadwater Tower property and
all improvements and personal property previously utilized by Seller in the
operation of the Broadwater Tower shall be "as is, where is" in the condition
such property existed on the day of closing. The terms of the Seller's lease
of the Broadwater Tower property, improvements and personal property shall be
a triple net lease with the monthly rent to be paid by Seller to Purchaser
being equal to the monthly interest earned on the "Tower Escrow Amount" (as
hereinafter defined) until the Seller satisfies the terms of the escrow of the
Tower Escrow Amount by Seller vacating its possession of the Broadwater Tower
real property. In the event that Seller exercises its option to lease,
following the closing of the Transaction, the Broadwater Tower property and
all improvements and personal property previously utilized by Seller in the
operation of the Broadwater Tower, Purchaser shall place the sum of
$2,000,000.00 cash into escrow at the time of closing (the "Tower Escrow
Amount"). The escrow agent for the Tower Escrow Amount shall be the title
insurance company which handled the closing of the Purchased Assets. The sole
condition for the release of the Tower Escrow Amount to Seller shall be the
Seller's vacation of the Broadwater Tower real property. Seller shall advise
the Purchaser and the escrow agent, in writing, of the Seller's vacation of
the Broadwater Tower real property. Upon receipt of the Seller's written
notice that it has vacated the Broadwater Tower real property the escrow agent
shall, upon its verification that Seller has vacated the Broadwater Tower real
property (which verification shall occur within two days after receipt of
Seller's written notice), automatically and immediately pay to Seller the
Tower Escrow Amount and all interest which accrues thereon after the date such
sum becomes due and owing to Seller. It is agreed by the Parties that the
physical condition of the Broadwater Tower real property at the time of
Seller's vacating the same shall not be relevant with respect to the release
to Seller of the Tower Escrow Amount, and the sole event required to release
the Tower Escrow Amount to Seller shall be the Seller's vacating the
Broadwater Tower real property. All interest earned on the Tower Escrow
Amount from the date of closing to the date of Seller's vacation of the
Broadwater Tower real property shall be delivered on a monthly basis by escrow
agent (on behalf of Seller) to the Purchaser as the monthly rent due from
Seller to Purchaser for the Seller's leasing of the Broadwater Tower property
during such time period. Such rent shall be paid by the escrow agent solely
from the interest accrued on the Tower Escrow Amount until such time as the
Seller delivers written notice that it has vacated the Broadwater Tower real
property.
All real estate taxes, personal property taxes, prepaid items, utility
charges and other ongoing costs and expenses related to the ownership and
operation of the Properties shall be prorated as of the date of closing.
3. Earnest Money; Closing Date. Upon the execution of this Letter of Intent,
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Purchaser will wire transfer to an escrow agent to be mutually agreed upon by
Purchaser and Seller immediately available funds in the amount of
$1,000,000.00 as an earnest money deposit (the "Earnest Money Deposit"). The
Earnest Money Deposit shall be refundable to Purchaser in the event that (i)
no "Definitive Agreement" (as hereinafter defined) is executed and delivered
by the Parties on or before 5:00 p.m. EST on August 10, 1996, time being of
the essence, or (ii) Purchaser notifies Seller, in writing and prior to the
expiration of the "Due Diligence Period" (as hereinafter defined), of the
Purchaser's election not to proceed with the acquisition of the Purchased
Assets. After the expiration of the Due Diligence Period, the Earnest Money
Deposit shall become nonrefundable to Purchaser, absent a material breach of
the Definitive Agreement by Seller. Upon the expiration of the Due Diligence
Period, Purchaser shall increase the principal amount of the Earnest Money
Deposit by wire transfer to the escrow agent of immediately available funds in
an amount of an additional deposit of $1,000,000.00. The closing date for the
Transaction shall be October 1, 1996, provided that the closing date may be
extended by Purchaser solely for the purpose of Purchaser continuing to pursue
the finding of suitability as more fully described in Paragraph 4 hereof, and
provided further that the closing date shall then occur within ten (10) days
after Purchaser obtains a finding of suitability as more fully described in
Paragraph 4 hereof (but in no event later than December 1, 1996). At the
later of (aa) such time as Purchaser has obtained the finding of suitability,
or (bb) the expiration of the Due Diligence Period (as hereinafter defined),
Seller may, at its sole election, extend the closing date (without liability
to Purchaser for such extension) for such time period as shall be required in
order for Seller to comply with the WARN Act. At the closing, the Earnest
Money Deposit plus accrued interest, shall be applied against the Purchase
Price. In the event that the closing does not occur for any reason other than
either (x) a failure to obtain a finding of suitability of Purchaser on or
before December 1, 1996 (pursuant to the terms and conditions as more fully
set forth in Paragraph 4 hereof), or (y) a material breach of the Definitive
Agreement by Seller, then Seller may, at Seller's option, elect to: (A) retain
the Earnest Money Deposit plus all accrued interest and all monies paid on
account of the purchase price as liquidated damages, in which event the
Definitive Agreement shall become null and void and both Parties shall
thereupon be released of all further liability hereunder (it is hereby agreed
that, without resale, Seller's damages will be difficult of ascertainment and
that the Earnest Money Deposit plus all accrued interest and all monies paid
on account of the purchase price constitute a reasonable liquidation thereof
and not a penalty), or (B) apply said monies toward Seller's damages,
including, but not limited to, loss of bargain, consequential damages and
attorneys' fees. The Parties shall negotiate the terms, conditions, amount
and circumstances under which a break-up fee may be paid to Purchaser in the
event that Seller sells the Purchased Assets to an entity or person other than
Purchaser. The terms and conditions of the breakup fee shall be set forth in
the Definitive Agreement.
4. Definitive Agreement. Upon the execution of this Letter of Intent, the
Parties shall negotiate in good faith until the "Termination Date" (as
hereinafter defined) to attempt to agree upon, execute and deliver a mutually
acceptable purchase and sale agreement for the Purchased Assets (the
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"Definitive Agreement"). The Definitive Agreement shall contain the terms and
conditions set forth herein and such other terms and conditions as are agreed
upon by the Parties.
The Definitive Agreement (if agreed upon and executed by the Parties) shall
contain, as a condition precedent to Purchaser's obligation to close the
Transaction, a requirement that a finding of suitability of the Purchaser (as
the lessor of a portion of the Broadwater Marina to President Casino-
Mississippi, Inc. and to obtain a gaming license for a gaming facility at the
Broadwater Marina) be made by the Mississippi Gaming Commission. Purchaser
shall file an application for a finding of suitability by the Mississippi
Gaming Commission within seven (7) days following the execution and delivery
of this Letter of Intent, and Purchaser shall thereafter use its best efforts
to advance and process such application. Purchaser shall fully and promptly
comply with all requests of the Mississippi Gaming Commission regarding the
processing of such application and with the requirements for the granting of a
finding of suitability to Purchaser. The Purchaser shall concurrently provide
Seller with a copy of all documents filed by Purchaser with the Mississippi
Gaming Commission regarding the finding of suitability (excluding any non-
public personal disclosures), and Purchaser shall promptly provide Seller with
a copy of all requests for information and other correspondence concerning the
Purchasers suitability application received by Purchaser from the Mississippi
Gaming Commission (provided that Purchaser may blackout any personal, non-
public information set forth in any correspondence received from the
Mississippi Gaming Commission prior to sending a copy of the same to Seller).
Prior to the closing of the Transaction or the termination of the Definitive
Agreement by Seller as hereinafter set forth, Purchaser shall provide Seller
with a bi-weekly written status report regarding the Purchaser's application
for a finding of suitability. In the event that: (i) Purchaser has been
advised in writing by the Mississippi Gaming Commission that Purchaser will be
unable to obtain the finding of suitability; and (ii) Purchaser's inability to
obtain such finding of suitability is for reasons which are beyond Purchaser's
control and which cannot be cured by Purchaser, then upon the occurrence of
the events in subparagraphs (i) and (ii), Purchaser may elect to terminate the
Definitive Agreement by delivering written notice of such termination to
Seller on or before December 1, 1996 and, upon such termination, the Earnest
Money Deposit will be returned to Purchaser. Time shall be of the essence
with respect to such termination notice, and such notice, if sent, shall set
forth the reason such finding of suitability is unobtainable, and shall
include a copy of any writing from the Mississippi Gaming Commission stating
that the finding of suitability has been denied to Purchaser. In the event
that the Mississippi Gaming Commission does not issue a finding of suitability
to Purchaser on or before December 1, 1996, then Seller may at any time
thereafter (until such time, if any, when a finding of the suitability of
Purchaser is formally made by the Mississippi Gaming Commission), in Seller's
sole discretion, terminate the Definitive Agreement and retain the Earnest
Money Deposit without any further liability to Purchaser.
The Definitive Agreement (if agreed upon and executed by the Parties) shall
also contain, as a condition precedent to Purchaser's obligation to close the
Transaction, a requirement that the Transaction described in this Letter of
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Intent shall close concurrently with the Purchaser's acquisition of the
leasehold interest of President Riverboat Casino-Mississippi, Inc. (the
"Marina Lease"). In the event that the Purchaser's acquisition of the Marina
Lease is not closed on or before December 1, 1996 for any reason other than
for a "Failure of Title" (as hereinafter defined) with respect to the
conveyance by President Riverboat Casino-Mississippi, Inc. of the Marina
Lease, then Seller may, at any time thereafter, terminate the Definitive
Agreement and retain the Earnest Money Deposit without any further liability
to the Purchaser. In the event that the Purchaser's acquisition of the Marina
Lease is not closed on or before December 1, 1996 by reason of a "Failure of
Title" (as hereinafter defined) with respect to the conveyance by President
Riverboat Casino-Mississippi, Inc. of the Marina Lease, then Purchaser or
Seller may elect at any time thereafter (until such time as President
Riverboat Casino-Mississippi, Inc. shall have corrected such Failure of Title)
to terminate the Definitive Agreement by delivering written notice of such
termination to the other party and, upon such termination, the Earnest Money
Deposit will be returned to Purchaser. A "Failure of Title" as used herein
shall mean that President Riverboat Casino-Mississippi, Inc. is unable to
deliver to Purchaser good and transferable title to its interest as lessee
under the terms of the Marina Lease free and clear of all liens, claims and
encumbrances except for (i) any contracts to be assumed by the Purchaser, and
(ii) the title exceptions set forth in Seller's and President Riverboat
Casino-Mississippi, Inc's existing title policies other than title exceptions
for any existing mortgages, UCC security interests, and judgments.
The Definitive Agreement shall supersedes the terms and conditions of this
Letter of Intent. In the event that the Parties have not agreed upon,
executed and delivered the Definitive Agreement on or before 5:00 p.m. EST on
August 10, 1996 (the "Termination Date"), time being of the essence, then the
obligation to continue negotiations in good faith and the other "Binding
Obligations" (as hereinafter defined) shall automatically expire and be of no
further force and effect, and thereafter neither Purchaser nor Seller shall
have any further obligation or liability to the other, and the Earnest Money
Deposit plus all accrued interest shall be returned to Purchaser,
5. Due Diligence. For the time period commencing on the date of the Parties'
execution of this Letter of Intent and continuing until 5:00 p.m. EST on the
date which is sixty (60) days following the date of the Parties' execution of
this Letter of Intent (the "Due Diligence Period"), the Purchaser and its
representatives shall have the right to enter upon and conduct an
investigation of the Properties and the Purchased Assets, including, without
limitation, their physical and environmental condition, the books and records
showing the operating history for the Properties, and such other matters as
Purchaser may deem necessary to evaluate the Transaction contemplated by this
Letter of Intent. Seller will provide Purchaser with requested information
within a reasonable period of time (taking into account the nature and scope
of the request) following Purchaser's request. Purchaser and its
representatives will coordinate all due diligence investigations with Seller,
and Seller shall have the right to have a representative present during any
on-site investigation of the Properties. Purchaser shall conduct its due
diligence investigation in a manner which will not disrupt the Seller's
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business operations at the Properties. Purchaser shall not perform any
drilling or other invasive testing at the Properties without obtaining the
prior written consent of Seller, which consent shall not be unreasonably
withheld or delayed. Purchaser shall promptly provide Seller with a copy of
all test results, reports, and other materials obtained by Purchaser in
connection with its due diligence investigation. If, for any reason,
Purchaser is not satisfied, in Purchaser's sole discretion, with the results
of due diligence investigation, Purchaser may terminate the Definitive
Agreement by written notice delivered to Seller no later than the expiration
of the Due Diligence Period, time being of the essence. If the Definitive
Agreement is not executed and delivered by the Parties before the Termination
Date, then the Due Diligence Period shall automatically terminate on the
Termination Date and the Earnest Money Deposit shall be returned to Purchaser.
Purchaser shall promptly repair and restore any damage caused to the Purchased
Assets and shall indemnify, defend and hold harmless Seller from and against
any and all claims, demands, liabilities and damages arising or resulting from
the Purchaser's due diligence investigation of the Properties and Purchased
Assets; provided, however, that Purchaser shall not be liable to Seller for
any claims, demands, liabilities and damages occurring solely as a result of
facts or pre-existing conditions (being only those facts or conditions not
caused by Purchaser, its agents, contractors or representatives which are in
existence prior to the commencement of the Purchaser's due diligence
investigation) at the Properties and which are discovered by Purchaser during
the course of its due diligence investigation. The obligations set forth in
the preceding sentence shall survive the termination of this Letter of Intent.
Purchaser and its agents and contractors shall provide Seller with evidence of
insurance coverage (to be reasonable in scope and amount) with respect to all
site testing and other on-site investigations to be performed during the due
diligence investigation of the Purchased Assets, and all such insurance
coverage shall name Seller as an additional Insured.
6. Exclusivity. For the period commencing on the date of the Parties'
execution of this Letter of Intent and expiring on the Termination Date, the
Seller and its representatives shall not, (i) directly or indirectly, solicit
or discuss any offers of third parties to purchase all or substantially all of
the Purchased Assets, or (ii) negotiate with or furnish any information to any
other party regarding the sale of all or substantially all of the Purchased
Assets which are the subject of the negotiation evidenced by this Letter of
Intent. Seller will notify Purchaser, within forty-eight hours, regarding any
contact made to any executive officer of Seller or to any of Seller's
representatives regarding any offer made to Seller to purchase the Purchased
Assets or a proposal made to Seller regarding the proposed purchase of the
Purchased Assets. Following the Parties' execution of this Letter of Intent,
Seller shall continue to operate the Properties in the ordinary course of
business and in a manner consistent with the Seller's past practice.
7. Confidentiality. Purchaser will treat as confidential and shall not
disclose or use, and will direct its representatives not to disclose or use,
to the detriment of Seller any information with respect to the Purchased
Assets which was obtained by Purchaser as a result of its due diligence
investigation or furnished by the Seller or its representatives to the
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Purchaser or its representatives at any time or in any manner other than in
connection with its evaluation of the Transaction proposed in this Letter of
Intent. Upon termination of the Due Diligence Period, Purchaser shall either
(i) return to Seller all of the information which Purchaser received from
Seller during the Due Diligence Period, or (ii) immediately destroy all of
such information and certify, in writing by an executive officer of Purchaser,
to Seller that such destruction has occurred; provided, however, that
Purchaser shall provide Seller with ten (10) days prior written notice before
the destruction of any documents, reports or other information, and during
such ten (10) day period the Seller shall have the right to require that
Purchaser immediately return any or all of such information to Seller rather
than destroying the same. The confidentiality and non-disclosure obligations
shall not apply if, and to the extent, the Purchaser can demonstrate that (a)
the information was known to Purchaser (as established by written documents
existing before disclosure of such information by Seller) prior to the earlier
of its due diligence investigation or its receipt of such information from the
Seller, (b) the information is or becomes part of the public domain other than
by Purchasers (or its representatives') direct or indirect act; (c) the
information is rightfully disclosed to Purchaser by a third party without
confidential or proprietary restrictions; or (d) similar information is
independently developed by Purchaser without access to the Seller's
information. In the event that Purchaser or its representatives are at any
time requested or required by any court or any other duly authorized
governmental entity (by oral questions, interrogatories, requests for
information or documents, subpoena or similar process) to disclose any of the
information obtained from its due diligence investigation or received from
Seller, Purchaser agrees to provide the Seller with prompt notice of such
request(s) so that the Seller may seek an appropriate protective order and/or
waive compliance with the provisions of this Letter of Intent.
Upon the execution and delivery of this Letter of Intent by both of the
Parties, the Parties shall jointly deliver a press release regarding the
Transaction. Thereafter, neither the Purchaser nor the Seller will, and each
will direct its representatives not to make, directly or indirectly, any
public comment, statement, or communication with respect to, or otherwise to
disclose or to permit the disclosure of the existence of discussions regarding
the possible Transaction between the Parties or any of the terms, conditions,
or other aspects of the Transaction proposed in this Letter of Intent or the
Definitive Agreement; provided, however, that the Parties may discuss with and
provide information regarding the Transaction to (x) the media and to stock
analysts, investment bankers and other financial analysts so long such
discussions and the information provided by the Parties is within the scope of
the joint press release issued by the Parties (and such information does not
address issues or provide information which was not addressed or provided in
the joint press release), and (y) the Parties' respective banks, accountants,
advisers and other representatives (including providing such persons and
entities with a copy of this Letter of Intent and the Definitive Agreement -
and concurrently informing all of such persons and entities to whom copies are
provided of the confidential nature of such information and the obligations of
the Parties under the terms of this Letter of Intent). Further, Purchaser
shall have the right to contact and provide information regarding the
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Transaction to the Nevada Gaming Commission and to the Mississippi Gaming
Commission. It is acknowledged that President Casinos, Inc. ("President")
will file with the Securities and Exchange Commission a copy of the separate
Letter of Intent regarding the sale of its Interest as a lessee under the
terms of the Marina Lease, and it is agreed by the Parties that subsequent
discussions by Purchaser pertaining solely to Purchaser's acquisition of the
President's leasehold interest in the Marina Lease in accordance with the
terms set forth in the letter of Intent between Purchaser and President shall
not violate the confidentiality provisions hereof. If a party is required by
law to make any such disclosure, it must first provide to the other party for
review and approval (which shall not be unreasonably withheld) the content of
the proposed disclosure, the reasons that such disclosure Is required by law,
and the time and place that the disclosure will be made. The obligations set
forth in the Paragraph 7 shall survive the termination of this Letter of
Intent.
8. Entire Agreement. It Is expressly agreed and understood that the only
binding and enforceable terms of the this Letter of Intent are the following
provisions (the "Binding Provisions"): (i) the Initial Earnest Money Deposit
of $1,000,000.00 and the terms of the return thereof as described in Paragraph
3 hereof, (ii) the description of the Purchased Assets as set forth in
Paragraph 1 of this Letter of Intent (provided that the Parties' agreement on
the description of the Purchased Assets does not constitute an agreement to
purchase and/or sell such Purchased Assets); and (ii) the terms of Paragraphs
4, 5, 6, 7, 9, 10 and 11 hereof. The Binding Provisions constitute the entire
agreement between the Parties, and supersede all prior oral or written
agreements regarding the subject matter hereof. The Binding Provisions may be
amended or modified only by a writing executed by all of the Parties. The
Binding Provisions do not obligate either of the Parties to purchase or sell
the Purchased Assets, and such obligation to purchase and sell the Purchased
Assets, shall be contained and enforceable only as specifically set forth in
the Definitive Agreement. The terms of Paragraphs 7, 10 and 11 hereof, and
the terms of the Purchaser's repair, restoration, and indemnification
obligations as set forth in the eighth sentence of Paragraph 5 hereof, shall
survive the termination of this Letter of Intent.
9. Governing Law. This Letter of Intent and the Binding Provisions will be
governed by and construed under the laws of the State of Mississippi without
regard to conflicts of law principles. Any action or proceeding seeking to
enforce any provision of, or based upon any right arising out of this Letter
of Intent shall be brought by and against the Parties in the United States
District Court for the District of Mississippi (or, in the event that the
dollar amount requirements for federal court jurisdiction are not met, then
such action shall be brought in the Mississippi state court located in
Harrison County, Mississippi), and each of the Parties hereby consents to the
jurisdiction of such courts in any such action or proceeding and waives any
objection to venue laid therein.
10. No Liability. Other than the Binding Provisions contained in this Letter
of Intent the paragraphs and provisions of this Letter of Intent do not
constitute and do not give rise to any legally binding obligation on the part
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of any of the Parties. Moreover, except as expressly provided in the Binding
Provisions (or as may be expressly provided in the Definitive Agreement), no
past or future action, course of conduct or failure to act relating to the
Transaction or relating to the negotiation of the terms of the Transaction or
the Definitive Agreement, will give rise to or serve as a basis for any
obligation or other liability on the part of the Parties.
11. Cost and Expenses. The Purchaser and Seller will be responsible for and
shall bear all of their own respective costs and expenses (including any
broker or finder's fees and the expenses of its representatives) incurred at
any time in connection with pursuing or consummating the Transaction.
Purchaser shall specifically pay, indemnify and defend Seller against any fees
due Oppenheimer & Company and any other broker retained by Purchaser,
12. Amendment. Both this Letter of Intent and the Definitive Agreement will
be assignable by Purchaser only to a wholly owned subsidiary of Purchaser upon
prior written notice to Seller; provided, however, that in the case of such
assignment, Purchaser will remain liable for all obligations of the Purchaser
hereunder and under the terms of the Definitive Agreement.
The Parties expressly acknowledge and agree that, with the exception of the
Binding Provisions, this Letter of Intent does not constitute a binding
agreement on the Parties, and neither party shall be obligated to purchase any
and sell the Purchased Assets until both Parties execute and deliver a
mutually acceptable Definitive Agreement. Facsimile signatures of
representative os the Parties to this Letter of Intent shall be treated as
original signatures for all purposes.
Please indicate that the terms and provisions set forth above are
acceptable, and we will thereafter proceed to negotiate the Definitive
Agreement.
Very truly yours,
PRIMADONNA RESORTS, INC.
By:/s/ Gary E. Primm
Gary E. Primm
Chief Executive Officer
Accepted by Seller this 17th day of July, 1996.
Seller:
BH ACQUISITION CORPORATION
By:/s/ John E. Connelly
John E. Connelly, President
10
EXHIBIT 99
Contact: John S. Aylsworth
President Casinos, Inc.
314-622-3000
FOR IMMEDIATE RELEASE
PRESIDENT CASINOS, INC. ANNOUNCES SALE
OF LEASEHOLD INTERESTS IN BILOXI, MISSISSIPPI PROPERTY
ST. LOUIS, MISSOURI, July 22, 1996 -- President Casinos, Inc. (NASDAQ:PREZ)
announced today that it has entered into a letter of intent with Primadonna
Resorts, Inc. to sell for $15 million in cash its leasehold rights to the
property leased by President Casinos at its Broadwater Marina in Biloxi,
Mississippi. The Broadwater Marina property currently is the site of
President Casinos' barge casino operations in Biloxi.
Pursuant to the terms of the letter of intent, President Casinos will lease
the property back from Primadonna under a triple net operating lease with no
additional monthly rental obligations until the expiration of one year and,
subject to certain conditions, will receive an option to extend the lease,
subject to a 90-day cancellation notice, form Primadonna for up to an
additional two-year period at a rental equal to 2% of net gaming revenues
during the term.
The Broadwater Marina property is leased by President Casinos under a long-
term lease from BH Acquisition Corporation, a company wholly owned by John E.
Connelly, the chairman and principle stockholder of President Casinos. In a
separate transaction, BH Acquisition has entered into a letter of intent with
Primadonna for the sale of the certain properties owned by BH Acquisition in
Biloxi, including the Broadwater Marina property, the Broadwater Resort, the
Broadwater Tower and the 18-hole Sun Golf Course, for $41.5 million in cash.
The transaction between President Casinos and Primadonna is subject to a
number of conditions, including completion of due diligence, negotiation of a
definitive agreement by the parties and receipt of regulatory approvals. The
closing of the transaction is tentatively scheduled for October of 1996.
John S. Aylsworth, Executive Vice President and Chief Operating Officer of
President Casinos, commented, "With this transaction we will ultimately
withdraw from a highly competitive market where major gaming companies are
establishing destination resorts. The transaction will allow us to
concentrate our resources on our operations in St. Louis and Iowa, as well as
continue to position ourselves in new potential gaming jurisdictions."
President Casinos, Inc, owns and operates riverboat and dockside gaming
facilities in Davenport, Iowa, Biloxi, Mississippi and downtown St. Louis,
Missouri near the base of the Gateway Arch.
